Phillips 66

at this time all participants are in a listen only mode later we will conduct a question and answer session please note that this conference is being recorded I will now turn the call over to Jeff Dietert Vice President Investor Relations Jeff you may begin welcome to Phillips 66 earnings conference call

Participants on today's call will include Mark Lazor, Chairman and CEO, Kevin Mitchell, CFO, Don Baldrige, Midstream and Chemicals, Rich Harbison, Refining, and Brian Mendel, Marketing and Commercial. Today's presentation can be found on the investor relations section of the Phillips 66 website, along with supplemental financial and operating information. Slide two contains our safe harbor statement. We will be making forward-looking statements during today's call. Actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. With that, I'll turn the call over to Mark. Thanks, Jeff.

Our results reflect strong operating performance in a challenging margin environment. The strength and stability of our midstream results provided a resilient platform demonstrating the advantages of the breadth of our integrated portfolio. In the fourth quarter, we achieved our shareholder distribution target with $13.6 billion distributed through share repurchases and dividends since July 2022. In refining, we set goals to improve performance, lower costs, and capture more of the market. This year was our second consecutive year of above industry average crude utilization. We also set record clean product yields both this quarter and for the full year, while reducing our costs by a dollar per barrel. These results are a testament to the hard work, commitment, and dedication to excellence by the People & Riches organization. We exceeded our $400 million synergy target on the DCP midstream acquisition by capturing $500 million of run rate synergies. In total, the DCP transaction has increased midstream's mid-cycle adjusted EBITDA by $1.5 billion. We set an ambitious goal of $1.4 billion in run rate business transformation savings. We positioned the company for success through these cost reductions and exceeded our goal, achieving $1.5 billion of savings. As part of the enhanced priorities in 2023, we committed to at least $3 billion of non-core asset dispositions. We have high-graded the portfolio and are currently at $3.5 billion of announced asset divestitures. Although our net debt to capital ratio ended higher than our target level, we continue to have a strong balance sheet, and we are making debt reduction a key component of our new commitments. We've completed the strategic priorities that we laid out in 2022, enhanced in 2023, and committed to achieving by the end of 2024. I'm proud of the work our employees have done to accomplish these important priorities and deliver on our commitments to shareholders while maintaining industry-leading safety performance. Slide 4 shows the progress of the Asset Disposition Program. In January 2025, we received $2.1 billion of cash proceeds for the Co-op and Gulf Coast Express dispositions. This brings the cash proceeds to $3.5 billion, which we're using to advance our new strategic priorities. We continue to evaluate our assets as part of our ongoing portfolio optimization. Slide 5 shows the growth of our midstream business, including the recent announcement of the Epic NGL transaction. We've advanced our well-head-to-market strategy through organic projects and strategic transactions that provided significant synergies and strong returns. This nearly doubles EBITDA between 2021 and the anticipated transaction close later this year. Similar to the Pinnacle acquisition last year, we saw an opportunity to acquire high-quality assets which are complementary to our existing footprint and provide a platform for further growth opportunities at attractive returns. The transaction furthers our vision of being the leading integrated downstream energy provider, and upon closing, increases Midstream's mid-cycle adjusted EBITDA to $4 billion. We'll continue to capitalize on our growth platform to generate strong returns and significant free cash flow in 2025 and beyond. Slide 6 outlines our new strategic priorities for 2025 through 2027. Supported by our world-class operations, we are committed to returning over 50% of operating cash flow to shareholders. We've set challenging yet achievable operational targets for our refining and midstream businesses. We have developed a culture of continuous improvement in refining and are targeting $5.50 per barrel adjusted controllable costs, excluding turnarounds, over the next two years. We will grow Midstream and Chemical's mid-cycle adjusted EBITDA by an additional $1 billion in total by 2027. In Midstream, we have plans in place to continue to expand our well-head-to-market strategy with high return opportunities. In Chemicals, the megaprojects in the U.S. Gulf Coast and Qatar are expected to start up in late 2026. These milestones are expected to bring our non-refining mid-cycle EBITDA to $10 billion by 2027, which we expect will represent two-thirds of our total company EBITDA. We also plan to reduce total debt to $17 billion as early as the end of this year, depending on the margin environment and the timing of planned dispositions. We will continue to increase shareholder value through strong operating performance and disciplined capital allocation as we deliver on our new strategic priorities. Now over to Kevin to cover our quarterly results.